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FCC approves light net neutrality rules for wireless

By Phil Goldstein

WASHINGTON--The FCC voted to approve net neutrality rules for wireless and wired networks, bringing to a climax theintense regulatory gymnastics by FCC Chairman Julius Genachowski that began more than a year ago. As expected, the rules largely go easy on wireless carriers, though the rules in general are likely still going to provoke protest and possible lawsuits from telcos, as well as criticism from public interest groups that do not think the rules go far enough.

In a contentious 3-2 vote, the FCC passed the rules. The commission's two Republicans, Robert McDowell and Meredith Attwell Baker, argued that the proposal is not necessary, legally unjustified and is politically motivated. Commissioners Michael Copps and Mignon Clyburn, both Democrats, joined Genachowski, a Democrat, in supporting the order, despite their concerns that the order does not go far enough.

"Given the importance of an open Internet to our economic future, given the potentially irreversible nature of some harmful practices, and given the competition issues among broadband providers, it is essential that the FCC fulfill its historic role as a cop on the beat to ensure the vitality of our communications networks and to empower and protect consumers of those networks," Genachowski said.

Verizon Wireless (NYSE:VZ), AT&T Mobility (NYSE:T), Sprint Nextel (NYSE:S), T-Mobile USA and other wireless carriers will be barred from blocking services like Google Voice and Skype that compete with their own voice and video offerings, as well as those in which they have an attributable interest. However, wireless carriers would not face the same restrictions wired operators will on blocking Web traffic and other applications--a ban on unreasonable discrimination in transmitting lawful network traffic.

Wireless carriers also will face transparency requirements on network management policies and a basic "no-blocking" rule on lawful content and applications. The no-blocking rule won't generally apply to carrier engaged in the operations of application storefronts. The rules will allow for reasonable network management--which is defined as actions that are "appropriate and tailored to a legitimate network management purpose, taking into account network architecture."

Genachowski said the FCC recognizes there are significant differences between wireless and wired networks, among them the "unique technical issues involving spectrum and mobile networks, the stage and rate of innovation in mobile broadband; and market structure."

If consumers suspect their carrier is violating the terms of net neutrality, they will have the ability to raise a complaint at any time on the FCC's website. Once operators and ISPs have been given 10 days' notice, anyone can issue a formal complaint. The FCC will use a tool called its "rocket docket" to expedite complaints. The FCC can also initiate its own inquiries into practices that might violate the rules.Â

Wireline broadband providers will be subject to the same restrictions as wireless carriers, but the rules will allow them to offer "specialized services" apart from the open Internet. Companies would have to justify these services though, and show that their use does not detract from investment in the open Internet. Wireline providers will face a ban on unreasonable discrimination of content, but will be free to engage in reasonable network management. The rules state that "pay for prioritzation" arrangements, as a general rule, will not satisfy the ban on unreasonable discrimination.

Importantly, the plan does not call for the reclassification of broadband under Title II of the Telecommunications Act as a common-carrier service. That proposal, which Genachowski first floated in May, was vehemently opposed by Verizon, AT&T, Comcast and the CTIA. Since then, AT&T, Verizon and other carriers aggressively lobbied the FCC on the issue, as have proponents of net neutrality, including public interest groups and the Open Internet Coalition, which represents the likes of Google (NASDAQ:GOOG) and Amazon.

Rather than take a Title II route, the FCC's office of general counsel said the FCC has authority to promote advanced telecommunications services and encourage broadband deployment--factors that underpin its authority to create the rules. McDowell said the order is a "Title II order dressed in a threadbare Title I disguise." He said Congress has not given the FCC the explicit authority to regulate broadband.Â "The FCC is not Congress," he said. "We cannot make laws. "

Copps said he would have preferred that the FCC reclassify broadband under Title II, and felt that there needed to be greater parity between wireless and wired networks. Copps said he considered dissenting from the order, but said without action the "wheels of
network neutrality would grind to a halt for at least the next two years."

McDowell said that on the winter solstice, the darkest day of the year, the FCC's action "marks one of the darkest days in recent FCC history." He, and Baker, said that nothing on the Internet is broken and needs to be fixed; that the FCC does not have the statutory authority to make the rules; that the rules will likely cause irreparable harm to operators and to investment; and that existing law and Internet government structures provide ample consumer protections.

The FCC's progress on net neutrality stalled in April when a federal appeals court ruled that the agency had overstepped its legal authority when it cited Comcast in 2008 for interfering with subscribers' access to peer-to-peer file sharing services. The ruling, Comcast v. FCC, said the FCC could not rely on its "ancillary jurisdiction" under Title I of the Telecommunications Act to regulate how Comcast managed its network. That ruling put on hold the FCC's net neutrality rules, which were passed in draft form in October 2009.

Both McDowell and Baker said that the FCC is pursuing the same legal strategy that the court struck down in the Comcast case. The two Republicans also said their offices received the final version of the order less than 12 hours before the FCC's meeting, and that the order had significant changes made to it.

The new rules from the FCC are likely going to be challenged in court. Indeed, Verizon is considering filing a lawsuit against the rules, pending a detailed review of them, according to a report in the National Journal, which cited unnamed sources. The report cautioned that no final decision has been made. A Verizon spokesman, Edward McFadden, declined to comment.

Net neutrality proponents were disappointed that the rules did not go far enough, particularly for wireless networks. "Genachowski has spoken eloquently about the dangers of creating Internet fast lanes and toll roads,"Â wrote Harold Feld, the legal director of the public interest group Public Knowledge, in a blog post. "On every single important and controversial question on what an 'open Internet' actually mean--such as whether companies can create 'fast lanes' for 'prioritized' content or what exactly wireless providers can and cannot do--the actual language of the rules is silent, ambiguous, or even at odds with the text of the implementing order. The only way to find out what protections consumers actually have will be through a series of adjudications at the FCC."